The True Test of Good Positioning

If a business is perfectly positioned, it means that there is no direct competition. In other words, it will be difficult for a customer to make an apples to apples comparison. For example, can you think of a direct competitor to the iPod? Or Twitter? Or Google? Or the Nano car in India from the Tatas?

Most well positioned products win customers through substitution. Not through direct competition. For example, Twitter has won users not by offering the same set of features that Facebook is offering or what blogs are offering. Twitter has won users by offering a substitute product and thus creating an entirely new category (micro-blogging.) Conversely, if you have a successful product or service, you should fear substitute products much more than clone-type new entrants or the moves of existing competitors.

So what is the true test of good positioning?

"Will your users still use your product or service even if your product or service is performing below expectations in certain non-core areas?"

For example, think of a highly successful restaurant in your town. And think about all the things that are wrong with that restaurant in spite of which the restaurant is successful. For example,
the service may be poor or the wait times may be too long or the location may suffer from poor parking. As another example, if you look at Twitter, the site has gone down numerous times. Or if you look at Windows you will notice that it has been infamous for it's poor speed and performance. But these products have still succeeded because their core set of functions have not been replicated or are not easily replicable by competitors or substitute products. If you are in a highly competitive business with perfect substitutes for your product, you're relying only on incremental improvements or operational effectiveness (faster, cheaper, better quality) to help you stay ahead.

Starting a business is hard-enough. You don't want to have to be in a position where your nascent customer base migrates at the slightest mistake or goof-up that your company makes. So the way to have sticky customers is to apply this one true test of good positioning.